The Reserve Bank of India (RBI) has hiked the interest rates by 25 bps on Friday evening.

The hike by the RBI was unexpected, but the impact would be high on home loans and auto loans.

Experts believer that the home loans and auto loans rates will go up following the hike in the interest rate by the Apex Bank.

The RBI has raised the benchmark short-term interest rates - repo (banks pay the repo rate to borrow from RBI) to 5 per cent from 4.75 per cent and reverse repo rates (banks receive parking surplus funds with RBI) to 3.5 per cent from 3.25 per cent. interest rate is the greatest instrument the RBI has to contain the inflation.